September is Emergency Preparedness Month. Many people think about setting up a first aid kit, having plastic available for windows, and charging the cellphone. It also is important to prepare your finances for an emergency. Fires, floods, natural disasters and medical emergencies all cause financial hardship. Job loss or an economic recession can have serious impacts.

These seven steps will help you build a financial foundation to prepare for any emergency.

1. Build an emergency fund. Work to save enough money to cover at least six to nine months of living expenses. Keep these savings in an account that you cannot unintentionally spend, but that you can reach in an emergency. Build this account even while you pay off credit card or other debt. Once you pay off debt, increase the savings. Sell unneeded items, take a side job or stash any pay increases, gifts, rebates or inheritances until you reach your goal.

2. Keep records. Before an emergency strikes, create a financial emergency kit. This kit should contain copies of important financial documents. Keep original documents, such as property titles, mortgage papers, birth certificates and insurance policies, in a secure place, such as a safe deposit box at a bank. After a natural disaster, fire or similar destruction, take photos of the damage immediately. Also, save the items you are filing claims for until an insurance adjuster confirms you can dispose of them. Keep copies of any letters you send regarding damages, and request delivery confirmation for anything you mail.

3. Keep cash on hand. In an emergency, credit cards, debit cards and ATMs might not work for a few days. For this reason, it is smart to have some cash in your financial emergency kit. Be sure to keep this secure. Do not dip into it to pay the pizza delivery person, and do not let others know about it unless absolutely necessary.

4. Maintain appropriate insurance coverage. Everyone needs auto, home and health insurance to help them recover from a disaster. People who have dependents also should have life insurance coverage. Additionally, people who live in a possible flood zone may need to purchase special flood insurance. Check your policies regularly to make sure they are up to date. Obtain new bids if it has been a while since you compared rates, if you have added onto your home, or have obtained new valuables (such as jewelry). Keep your insurance agent information and policy numbers with your emergency financial paperwork, and store policies in a safe place.

5. Store your account numbers, passwords and contact information. Keep a list of your account numbers and passwords in a place where you will be able to access it in an emergency. If something happens that will prevent you from paying bills, contact lenders to explain the situation. Lenders frequently offer a grace period to people affected by a natural disaster or other emergency. A cloud-based password service can help keep information accessible, yet safe from identity theft.

6. Periodically check your credit profile and credit score. Once a year, request your credit reports, available annually at no charge from www.annualcreditreport.com. Request your file from each of the three major credit bureaus. Check each report carefully to be sure there are no inaccuracies. If you do find errors, follow the directions on the agency’s website to request a correction. Make sure your spouse checks his or her report. If you have children, especially teens who might soon need to build credit, check their reports, too. This way, you will have an accurate record of your credit, which can help you to rebuild after a disaster.

7. Get out of debt – now. Nothing poses more financial risk than being deep in debt. It is best to live with a budget and pay down debt, especially credit card debt. If your bills are more than you can pay on a regular basis, talk with a reputable debt relief firm about ways to pay off your debt and regain your financial freedom.

For a comprehensive list of what to prepare for a financial emergency, visit Ready.gov’s Financial Preparedness page. Even if you can complete only a few steps at a time, being ready for the unexpected is a smart way to give yourself peace of mind.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.

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